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KUALA LUMPUR, Oct 19 (Bernama) -- Prime Minister, Datuk Seri Dr MahathirMohamed said when presenting Budget 2002 at the Dewan Rakyat that thenation is endowed with fertile land can be utilised for the cultivation ofcrops and the rearing of livestock.

23 October 2001 (Business Times) - MALAYSIA’S purchase of several mainbattle tanks (MBT) may come under a countertrade arrangement in which partof the payment may be made in the form of palm oil and palm oil products.Industry sources say the countertrade initiative is being looked into asone of the options available besides cash payments to help promote thecommodity’s standing overseas.“The countertrade can help promote palm oil in arms and weaponry-producingcountries such as Russia, Turkey, the UK, Italy, France and the US,” anindustry source told Business Times in Kuala Lumpur yesterday.“However, it is too soon to say. The agreement will be conducted ongovernment-to-government basis,” he said.He said, the purchase would also look at long term development programmessuch as transfer of technology, mutual maintenance programmes and otherdevelopment programmes rather than a one-off deal.Defence Minister Datuk Seri Najib Abdul Razak said Malaysia would buy theMBT as part of its efforts to boost the firepower of the Royal MalaysianArmy and beef up national security and defence.The purchase has been approved by the Government under the Eighth MalaysiaPlan (8MP) 2000-2005. Under the 8MP RM2.5 billion has been allocated forvarious development programmes for the Malaysian Armed Forces.He, however, refused to give details of the cost and other information,but it was learnt that the MBT would replace the Scorpions, the first tankbought by the Armed Forces more than 20 years ago.It is also understood that arms producers from countries such as Russia,Turkey, the UK, Italy, France and the US are being shortlisted.However, it is not immediately known whether the countertrade arrangementalso involves other purchases of defence equipment and weaponry.Najib said the arms purchase that had been approved included the 155mmtowed Howitzer G5 cannons from South Africa to be delivered by December,and multiple rocket launcher system from Brazil by early next year.Others include submarine, an air defence system and helicopters for thearmed forces under the 8MP.Najib said the order for the Howitzer G5 cannons and multiple rocketlaunch system were made early this year, while orders for the newsubmarine and air defence system would be made next year.The countertrade arrangement is not new for Malaysia.In 1994, Malaysia bought 18 MiG-29 Fulcrum fighter jets for a total ofUS$600 billion (US$1 = RM3.80)under an offset programme. It involved acash payment of US$450 million,palm oil and palm oil products (US$95million) and supply of other Malaysian products (US$55 million).The palm oil was to be delivered to Russia over a period of five yearswhich incidentally ends this year.Last month, US multinational, General Electric International signed aUS$60 million agreement with Keretapi Tanah Melayu Bhd involving thepurchase of 20 high-powered “Blue Tiger”.Under the deal, the locomotives are to be delivered beginning April 2003in exchange for 200,000 tonnes of palm oil and palm oil products valued atUS$60 million, to be delivered by the Pasir Gudang Edible Oils Group.The Government is also eyeing fighter jets from both the US and Russia.The Royal Malaysian Air Force is evaluating two multi-role combataircraft, Boeing Military and Missile Systems’ F/A-18E/F strike fightersdubbed the Super Hornets.The Russian-made Sukhoi Su-30MK multi-role long-range twin-seater fighterbomber which is priced at about US$35 million a piece is also underevaluation.Primary Industries Minister Datuk Seri Dr Lim Keng Yaik had said earlythis month his ministry was attempting to squeeze palm oil into 20 percent of the payment in Malaysia’s proposed purchase of the figher jets.

23 October 2001 (Business Times) - THE 10 sen per litre increase in petroland diesel prices will have a chain reaction in terms of higher costs oftransport which will lead to an increase in the price of goods andservices. Inflationary pressures with the usual ramifications on wageswill follow.

Monday, October 22, 2001 (The Star ) -THE low-profile agriculture sectorhas received a breath of life from the budget, which has directed itsattention to encouraging the development of new areas in the food andresource-based industry as well as fully exploiting downstream activitiesin existing commodity-based industries.In presenting the Budget 2002, the Prime Minister, who is also FinanceMinister, had called for the development of new areas in agriculture asthe growth of the sector had previously been largely dependent on theoutput of commodities, namely oil palm, rubber and timber.He said that as Malaysia was a major producer of rubber, timber and oilpalm the country must fully exploit downstream resource-based activitiessuch as vulcanised rubber and furniture, which had the potential tocontribute towards economic growth.According to the Prime Minister, downstream activities based on rubber,rubber wood and oil palm, which had export potential, could bringtremendous benefits if fully exploited.The budget has proposed that companies which reinvest in the production ofsuch resource-based products be granted income tax exemption of 70%, orgiven investment tax allowance of 60%, for a period of five years.The proposal is effective for applications received by the MalaysianIndustrial Development Authority (Mida) beginning Saturday.Dr Mahathir added that the government would be giving 100% tax allowanceon capital expenditure to encourage food production on a large scale forexport and import substitution purposes.This incentive was previously provided for prawn farming, floriculture andplanting of approved fruits such as papaya, banana, passion fruit, starfruit, guava and mangosteen.Also proposed was the extension of the scope of the 100% tax allowance oncapital expenditure for large-scale export and import food forsubstitution purposes to vegetable and herb farming, breeding of fish,including ornamental fish, cockles and oysters and planting of flowers.This proposal is effective from the year of assessment 2002.Dr Mahathir said food products would also provide the stimulus to the foodprocessing industry, in which Malaysia had the expertise and credibilityto develop halal food.He said this industry had the potential to penetrate internationalmarkets.To further strengthen the agriculture sector’s contribution to growth,also proposed was that reinvestment undertaken by existing agriculturecompanies be granted 100% income tax exemption against the statutoryincome for a period of five years.To ensure self-sufficiency in poultry farming, the budget has proposed forthe rearing of chicken and ducks in the eastern corridor of peninsularMalaysia, Sabah and Sarawak to be granted pioneer status with income taxexemption of 85% or investment tax allowance of 80% for a period of fiveyears.This proposal is effective for applications received by the Mida fromtoday.Another significant proposal was the provision of price support assistanceto the Federal Land and De-|velopment Authority (Felda) palm oil andrubber settlers faced with declining prices.Palm oil settlers would be given RM12 per tonne if prices go below RM900while rubber settlers would get 15 sen per kg if rubber prices fall belowRM2.50

19 October 2001 (Business Times) - CRUDE palm oil production is expectedto decline by 2.1 per cent next year on account of low biological yieldcycle of the crop and the large hectarage which has been taken out ofproduction due to replanting.At the same time, crude and processed palm oil exports are expected toincrease by 11.5 per cent in 2002 to RM11.8 billion from RM10.6 billionestimated this year.Palm oil production in 2001 is anticipated to increase by an estimated onemillion tonnes or 8.9 per cent to reach 11.8 million tonnes.The higher output is on account of a 6.4 per cent increase in yield to19.5 tonnes per ha and the addition of another 158,200ha of planted areacoming into maturity in East Malaysia.As such, total matured hectarage will increase to 3.1 million ha with theproduction bulk or 67.5 per cent coming in from West Malaysia.In 2001, total hectarage planted is estimated to increase by 3.7 per centto 3.5 million ha.Meanwhile, the Government has introduced a replanting programme of200,000ha of oil palm by 2001 to reduce stocks and for use as palm oilfuel.Some RM300 million will be given out as grants to encourage replanting.

20 October 2001 (Business Times) - Following insurers' refusal to coverships chartered by crude palm oil exporters to transport the commodity toPakistan and the Middle East, the Government has intervened by absorbingthe ships' insurance coverage.

JAKARTA, Oct 17 Asia Pulse - Indonesia will send a trade mission to theChina in November as part of efforts to boost exports of crude palm oil(CPO) to that country, The Jakarta Post reported.The paper quoted chairman of the Indonesian Palm Oil Producers'Association (Gapki) Derom Bangun as saying the trade delegation will meetwith about 250 Chinese businessmen on Nov 9 to woo them to buy more CPOfrom Indonesia.China as one of the world's largest palm oil importers will raise its palmoil imports to 1.4 million tons this year from 1.1 million tons last year,Derom said.He added that Indonesia hoped to gain at least 40 per cent of theadditional palm oil imports.Indonesia had accounted for 330,000 tons, or about 30 per cent of China'stotal 1.1 million tons of imports.Indonesia's CPO production is expected to reach 7.2 million tons thisyear, compared with 6.5 million tons last year.

KUALA LUMPUR, Sat. 21 October 2001 (Business Times) — The Government willprovide insurance coverage for ships chartered by crude palm oil exportersto transport the commodity to Pakistan and the Middle East following therefusal of insurers to cover the vessels.

October 20, 2001 (The Star ) - WEST Malaysian Oil Palm Growers’Association president Tan Sri Dr Jesse J.C. Chang has been taken bysurprise by the generous incentives proposed in the Budget 2002 foragriculture companies, especially those in the plantation sector.“We have never been treated this way before. This is wonderful. The waythe government is beefing up the agriculture sector is better than what iscurrently taking place in the US,’’ he said.Chang said that he described the proposed 5-year income tax exemptioncould act as a “buffer” for agriculture players to improve theirproductivity, which would enable them to compete with producers from othercountries in the region.He said the oil palm sector had been experiencing rising costs offertilisers as well as machinery. In the past 10 years, machinery cost hadrisen by 100% and agriculture firms did not receive subsidy, as companiesin the US did, Chang said.He added the tax exemption would help players replace old machinery andbuy more fertilisers.On the RM10mil aid for promoting training of modern agriculture workers,Chang said this would help promote cost-efficiency in plantationoperations.On the 70% tax exemption for companies reinvesting on product-basedresources, Chang said the incentive would encourage players to put theirmoney back into their core operations and support their move to ventureinto downstream activities and the production of value-added foodproducts.

MANILA, Oct 17 Asia Pulse - The Philippines has joined its ASEAN partnersin exerting all their political and trade influence in the internationalcommunity to block efforts by the European Union (EU) to curb SoutheastAsia's vegetable oils and fats exports using food hygiene as alibi.Agriculture Secretary Leonardo Montemayor said this was the consensusreached by his counterparts from Malaysia, Thailand, Vietnam, Laos,Cambodia, Brunei Darussalam, Singapore, Indonesia and Myanmar during the23rd meeting of ASEAN Ministers on Agriculture and Forestry (AMAF) heldrecently in Medan, Indonesia.He said his colleagues has tasked Indonesian agriculture minister BungaranSaragih, AMAF chair, to formally request the European Commission torescind a controversial directive, which if carried out, will severelyrestrict oils and fats exports from ASEAN member nations.The controversial European Community Council directive provides thatedible oils and fats such as cooking oil, refined palm oil and all otherfood grade oils and fats sold in bulk should be transported in dedicatedtanks and vessels to ensure they don't get contaminated.If adopted, Montemayor said, edible oils and fats exporters would facedifficulty looking for dedicated tanks and vessels and incur higherfreight charges, making their products more expensive and less competitivein the world market.Under current practices, these foodstuffs are loaded in specificcompartments of vessels whose prior load needs not be edible oils and fatsas long as they are internationally recognized as acceptable priorcargoes.The directive is contained in a draft code of hygienic practice for thetransport of food in bulk and semi-packaged food, which Europe sponsoredand submitted to the Codex Alimentarius Commission (CAC) for approval, butwhich was shelved.CAC is a world body that sets and regulates food and agriculturestandards, provides guidelines on food safety, food transport, foodstorage and other matters.In its recent meeting in Geneva last July, the CAC instead adopted theCode of Hygienic Practice for the Transport of Foodstuff in Bulk andSemi-Packed Foodstuff, which clarified that the EC-supported draft codewas not applicable and that dedicated transport was not the norm in thetransport of edible fats and oils.Despite the setback, EU continues to lobby in various international fora,including the Codex, to have its controversial directive adopted,insisting that the move was a hygienic measure against possible foodcontamination.However, ASEAN member nations oppose the move, saying that if implemented,it would be too restrictive and would have negative impact on the region'smulti-million dollar edible oils and fats industry."The Philippines can't take this issue sitting down. Along with ASEAN, wewill muster enough support from friendly nations just so this directivewill not be carried out," Montemayor said.He added that the Philippines, Brunei and Malaysia would talk to otherIslamic countries who are members of the Codex to support the ASEAN standon the controversial directive.Montemayor said the Philippines and Thailand will also lobby ASEAN's causebefore the South American countries to gain their sympathy and to get therequired vote at the CAC to overrule the directive.At present, Indonesia and Malaysia refined palm oil exports wouldadversely be affected if the directive will be adopted and implemented.The DA said the Philippines would not, as yet, be affected with thedirective considering that its current oil exports to Europe consistsmainly of crude coconut oil, which is not covered by the measure."But it is the Philippines' and ASEAN's interest to have the directiverescinded not only as an expression of ASEAN solidarity but also becausewe plan to export cooking oil in the very near future," Montemayor said.

KUALA LUMPUR, Oct 18 (Reuters) - Malaysian palm oil futures broke a keyresistance level and edged higher by midday on Thursday due to technicalcovering and talk of market-friendly export figures, traders said.Cargo surveyors ITS and SGS are scheduled to release the export figuresfor the first 20 days of October next Monday.At the midday break, the new benchmark third-month January contract wasup 11 ringgit at 951 ringgit ($250.26) a tonne after trading as high as956 ringgit.Overall volume was moderate at 1,534 lots."I am sure the market will close above 946 ringgit," said one technicalanalyst, referring to the key resistance level which the market hadbroken."People are also optimistic about the export figures. My estimates sayexports can reach 850,000 tonnes," he added.The analyst pegged support at 920 ringgit and new resistance at 980ringgit.At the physical sector, traders said buyers from India showed interest tobuy crude palm oil (CPO) after New Delhi cut the import price of CPO to$286 a tonne from $337 fixed in August.The base price of RBD olein was also cut, but higher compared with CPO at$307 a tonne from $372 previously.Traders said Indian importers preferred to buy CPO than olein because oflower base prices."India's interest for CPO is there. I heard deals with Indian importershave been done in the past few days, but I have no details about theamount," said one trader.In physical palm oil, offers for October crude palm oil for the southernregion stood at 860 ringgit a tonne against bids of 855. A deal wasreported at 850 ringgit.Offers for CPO for the central region stood at 865 ringgit against bids of855. A deal was done at 855 ringgit.Offers for November CPO for the south and central regions were at 880ringgit against bids at 865. There were no deals.Among refined products October RBD palm oil was offered at $235 a tonne,November at $240 and December at $247.50.Offers for October RBD olein were at $242.50, with November at $247.50 andDecember at $255.October RBD palm stearin was offered at $237.50 a tonne and October palmfatty acid distillate at $205.

WASHINGTON, Oct 17 (Reuters) - U.S. Agriculture Department on Wednesdayforecast Brazil to significantly lower its plantings of cotton and cornduring the 2001/02 season as more farmers turn to soybeans.